Verizon, Redbox team up to build video streaming, DVD service

Verizon and Redbox are building a service combining DVD kiosk rentals and …

Verizon and Redbox are developing a new video service to compete against Netflix, which will combine Redbox's kiosk DVD and Blu-Ray rental service with streaming and downloadable video content made possible by Verizon's network.

Verizon and Coinstar (Redbox's parent company) announced the partnership today with a press release and press conference, saying a subscription service "and more" will become available in the second half of 2012. Details were limited due to "competitive reasons."

The joint venture will apparently not include DVDs through the US Postal Service, as Netflix offers. Redbox has kiosks at 29,000 locations nationwide, including grocery stores, convenience stores, drug stores, and at some Wal-Mart stores. "By offering instantly available online and mobile content with immediate access to physical media through rental kiosks, Verizon and Redbox will be uniquely positioned to deliver the best of both worlds—digital and physical—to consumers across the country," the companies said.

Verizon owns 65 percent of the new joint venture, which is also described in an SEC filing, with Redbox owning the other 35 percent. While Netflix is struggling after a shaky 2011, Verizon and Redbox will still have their work cut out for them. No mention of specific content was made, but Verizon said it will use its "industry-wide relationships with entertainment content providers" to ensure a good selection of movies online.

Interesting business model, if they charge a monthly sub for the streaming, but keep physical rentals on a per-day basis. I can see this taking off, especially if they're charging under $10/month for the streaming.

Not sure how to feel. Should this be seen as good thing, as it will provide what could be good healthy competition for Netflix and hopefully drive prices down, or is this going to be a needless service duplication that will only further fragment the market into incompatible pieces as different studios sign different streaming & rental deals with different companies?

I'm tending to think this is more bad than good.

Multiple companies trying to value-add onto a commoditized "fire hose" of movie streaming that includes mandatory participation from all studios? That would be good. Multiple companies each offering random smattering of differently-licensed films from different studios, when rental terms & pricing all fluctuating wildly in a way that only makes sense to some idiot-packed studio boardroom trying desperately to keep their commodity product from becoming further devalued by crazy random actions? That's a bad thing.

a) make new releases available for streaming earlier than Netflix andb) cobble together a better back-catalog of movies people actually care to see andc) do so for around the same price (+/- a few dollars/mo)

they could absolutely take on Netflix. There's a huge opportunity in the marketplace right now. Bring on the competition!

How can Verizon do this when they are charging so much for a measly 2GB of data?

Verizon Wireless is not the same as Verizon proper. I imagine the wireless branch has nothing to do with this effort. I would suspect that this would fall to (a) a brand new division or (b) FiOS's department.

This is likely Verizon wholesale aka the backbone group, and I'm not sure how they're going to be price competitive since most of the reason for Netflix's pricing increase was the expiration of favorable contracts with the studios with the new contracts coming in at significantly more expensive.

I can't see how this could work out. No one has a better relationship with the studios than Sony (which is a studio) and Apple (when Jobs sat on the Disney/ABC/ESPN board). And even they couldn't revolutionize content delivery and pricing. Plus, where's the hardware? Samsung, LG, Sony, Apple are all building their own content siloes. If they want to get to consumers, there has to be someone with a presence, and RedBox's kiosks don't count, even if they have credit cards and names. While Redbox isn't a nobody, they aren't Google or Amazon. Verizon is just trying to muscle into a market with money, there's no traction here, unless they're counting on a lobbyist-friendly, anti-market Republican majority that will let them throttle Netflix, Amazon and Youtube in the name of capitalism. Otherwise, owning the pipes and having money isn't enough to gain acceptance.

I can see this being an excellent service, but I get the feeling that Verizon isn't going to be able to pull free of their other service obligations and will be stuck with the same profit mongering studio pricing and the same content availability, and when it comes down to it, it's a war of convenience. Netflix is already well positioned in nearly every delivery method.

In other news, aren't we all glad that Verizon isn't allowed to promote QoS on their lines to allow better reception of their movies while stunting their competitors?

It's going to depend entirely on the movies they get. Redbox is fine for first release movies, but their catalog is incredibly shallow. Verizon's current VOD system is similarly hamstrung by lack of selection. If this is yet another video streaming service where you choice is between Mr. Poppler's Penguins or Gulliver's Travels (with Jack Black).

a) make new releases available for streaming earlier than Netflix andb) cobble together a better back-catalog of movies people actually care to see andc) do so for around the same price (+/- a few dollars/mo)

they could absolutely take on Netflix. There's a huge opportunity in the marketplace right now. Bring on the competition!

You seem to forget that neither Verizon or Red Box have any more control or sway with Hollywood than Netflix does. Netflix would do everything you mention if Hollywood would let them, but they won't so they can't. Verizon's only real clout here is that they have more financial resources to throw at licensing deals than Netflix does. However, Hollywood wants to hobble Netflix's success because Hollywood believes it can somehow eventually offer the same service itself, so it has no incentive to let Verizon step in and steal market share.

Plus, Red Box's selection SUCKS. They carry maybe 5% of the movies and TV shows Netflix does. They have a massive way to go to ever directly compete with Netflix.

This one had me confused. I was wondering when Coinstar got big enough to own Verizon. As hilarious as that would be an edit for clarity would be much appreciated. It's not really a big deal but I hold you guys to a higher standard than most of the internet.

Anyway, this is intriguing stuff. Hopefully the downloadable copies are up to snuff. No one lets you download anything close to Blu-ray quality at the moment. Fingers crossed for good bit rate and compression.

You seem to forget that neither Verizon or Red Box have any more control or sway with Hollywood than Netflix does. Netflix would do everything you mention if Hollywood would let them, but they won't so they can't. Verizon's only real clout here is that they have more financial resources to throw at licensing deals than Netflix does. However, Hollywood wants to hobble Netflix's success because Hollywood believes it can somehow eventually offer the same service itself, so it has no incentive to let Verizon step in and steal market share.

That's not quite right. The major studios do want to kill Netflix, but they don't have any plans to open up a similar service. They already had a system they were quite happy with: $6 Video on Demand 24 hour rentals through your cable/satellite/hotel/etc... Netflix basically gutted that profit engine and they want it back.

Given how satisfied I am with Amazon's VOD service, I'm surprised no one else has mentioned it. How would this be better than what Amazon offers? Earlier availability of new releases? Amazon's catalog seems to be pretty vast, but maybe I'm just not looking for what they don't have.

I don't think I will ever like the redbox craze; It's worse than a movie rental store in terms of convenience in every way.

If you want to get or return a movie, you have to wait in line while some parent in front of you lets their 2 kids choose a movie for 15 minutes.

At least at a movie rental store it only takes 2 seconds at the nightly drop-off box to return movies, and by having a store front you have more "space" to bypass the parent that takes forever; however, both require that you get off your fat ass and drive to the store.

Verizon has to have an amazing PR department for this to work. I personally would have a hidden smile on my face if this failed miserably (I know the wireless division and this are separate but Verizon is my least favorite company of all time) all of the streaming services are based upon what Hollywood wants to give them, and Verizon has to do a LOT of work to do to convince me as a customer.

it has to work with my current devices without adding another box to my set up. Preferably directly to my networked 47" plasma TVs. Viera cast in some rooms, Sony in others and a Roku in my kids' room. If they can make so that their system will run as well as Amazon-Amazon-Hulu I'm all in.

I don't know. It sounds like the ad goes "Now you can buy both services at a great price equal to the sum of the previously separate prices! You can rent DVDs from kiosks for $1! You can get unlimited streaming for a monthly fee similar to Netflix!"

Seriously, what's the benefit again?

To me the main problem right now is the lack of selection with streaming services. The only companies that can fix that are the owners of the content, and they ain't doing Jack Squat. The movie studios are going to stay with the Theatre/DVD/HBO/PPV/maybe-eventually-Netflix model as long as they can.

So a siloed service that will only be for Verizon customers? Or will this be open to any customer with an internet connection? I know media companies make a ton off of physical product, but by the way things are going the real competition vs Netflix would be for them to offer brand new movies as streamable high definition content. Until the media companies get on board for this, I can only see this in the dust bin behind Netflix.

a) make new releases available for streaming earlier than Netflix andb) cobble together a better back-catalog of movies people actually care to see andc) do so for around the same price (+/- a few dollars/mo)

they could absolutely take on Netflix. There's a huge opportunity in the marketplace right now. Bring on the competition!

You seem to forget that neither Verizon or Red Box have any more control or sway with Hollywood than Netflix does. Netflix would do everything you mention if Hollywood would let them, but they won't so they can't. Verizon's only real clout here is that they have more financial resources to throw at licensing deals than Netflix does. However, Hollywood wants to hobble Netflix's success because Hollywood believes it can somehow eventually offer the same service itself, so it has no incentive to let Verizon step in and steal market share.

Plus, Red Box's selection SUCKS. They carry maybe 5% of the movies and TV shows Netflix does. They have a massive way to go to ever directly compete with Netflix.

Let me make a minor correction to what you wrote: "Netflix [claims that they] would do everything you mention if Hollywood would let them, but they won't so they can't."

All we know conclusively is that Netflix has said they'd do all the awesome things we've asked for if only the big Hollywood studios would let them. Has that ever been positively confirmed? Is it possible that Netflix gets some benefit we're not privy (pricing, protection, etc) to that keeps them from doing more? Is it possible that they're just really bad negotiators?

As far as Red Box availability, I agree that the content available at their units is extremely limited, but you can't honestly expect a much better catalog from them while they're constrained by the physical capacity of their units. Streaming changes that. And if they prove to be better negotiators (smarter or tougher than Netflix) they may be able to break ground Netflix hasn't.

I'm willing to bet Verizon/Red Box can bring a lot better resources to bear on this than Netflix can. Better still, if both services even just come out evenly matched, the competition will force the sides to differentiate, either by pricing or quality (ie, content availability), and I see that as a win for consumers.

I think it's going to end up where Netflix has an agreement with something like a third of the major hollywood studios, Verizon/redbox another third, and Amazon the last bit. Which means that most of us will be stuck with a vast pool of B-movies and terrible documentaries, along with a few decent movies that rotate off of streaming very quickly, while most of the movies we want to watch are on someone else's service.

All we know conclusively is that Netflix has said they'd do all the awesome things we've asked for if only the big Hollywood studios would let them. Has that ever been positively confirmed? Is it possible that Netflix gets some benefit we're not privy (pricing, protection, etc) to that keeps them from doing more? Is it possible that they're just really bad negotiators?

As far as Red Box availability, I agree that the content available at their units is extremely limited, but you can't honestly expect a much better catalog from them while they're constrained by the physical capacity of their units. Streaming changes that. And if they prove to be better negotiators (smarter or tougher than Netflix) they may be able to break ground Netflix hasn't.

I'm willing to bet Verizon/Red Box can bring a lot better resources to bear on this than Netflix can. Better still, if both services even just come out evenly matched, the competition will force the sides to differentiate, either by pricing or quality (ie, content availability), and I see that as a win for consumers.

I think you only have to look at the difference between the DVD selection (which requires no licensing agreements) and the streaming selection (which does) to see the influence of the studios. If Netflix could offer their entire DVD catalog over streaming, they would adopt that in a heartbeat (the CEO has come out and said that he considers the snail mail service a dead end and wants to go all streaming ASAP), but the studios have zero interest in letting them do that. For Netflix it was a big victory that one studio tentatively agreed to let them stream a narrow selection of their movies for an outrageous price ($30 million dollars, or 3,750,000 customer/months) per movie, a deal that would almost certainly sink the company if they went through with it.

I don't know. It sounds like the ad goes "Now you can buy both services at a great price equal to the sum of the previously separate prices! You can rent DVDs from kiosks for $1! You can get unlimited streaming for a monthly fee similar to Netflix!"

Seriously, what's the benefit again?

To me the main problem right now is the lack of selection with streaming services. The only companies that can fix that are the owners of the content, and they ain't doing Jack Squat. The movie studios are going to stay with the Theatre/DVD/HBO/PPV/maybe-eventually-Netflix model as long as they can.

That's the problem, no one is going to let me pay $100 a year for all my TV and movie content when the existing system gives you people paying $10 for movie tickets, more for 3D, $80 a month for cable, netflix for back catalogs bringing a bit of extra revenue, VOD/bluray/dvd sales being an extra couple of hundred a year...

The market is missing a Steam for movies though, providing the same thing the discount DVD bin provides from the comfort of my couch. I could think of dozens of movies that I'd buy simply because they're great movies and if they were cheap and available through a decent service I'd go for it.

There's an important data point missing from the discussion: how do I watch their streaming content on my TV?

Seriously--are they expecting me to buy another set top box? Not gonna happen. If they get Apple TV support, or even AirPlay support, then it's worth consideration. Or maybe an icon on the PS3 XMB? Sony seems to be accepting all comers these days. But I'm not about to buy a brand new Blu-ray player or television set just so I can access their service, and I'm not going to watch movies on my laptop or iPad when I have a nice stereo and 46" television.

You seem to forget that neither Verizon or Red Box have any more control or sway with Hollywood than Netflix does. Netflix would do everything you mention if Hollywood would let them, but they won't so they can't. Verizon's only real clout here is that they have more financial resources to throw at licensing deals than Netflix does. However, Hollywood wants to hobble Netflix's success because Hollywood believes it can somehow eventually offer the same service itself, so it has no incentive to let Verizon step in and steal market share.

That's not quite right. The major studios do want to kill Netflix, but they don't have any plans to open up a similar service. They already had a system they were quite happy with: $6 Video on Demand 24 hour rentals through your cable/satellite/hotel/etc... Netflix basically gutted that profit engine and they want it back.

And of course the studios have been vocal in offering first run films as possible streams too. The service is very expensive and the first test run was scuttled by theater chains that rebelled, but the studios are definitely interested in finding ways to do their own content streaming without a middle man. They likely won't be successful, but that won't stop them from trying kill any potential competition in the meantime.

I wish they could just get the courts or congress or something to say that streaming == DVD and no special deals need to be done. What's the difference? Either way you're getting bits to me. In one way they arrive bit by bit and nother way all the bits arrive at once. Why should they be free to do as they wish with DVDs and not streaming? It just sucks so hard because it's illogical!

The studios are willing to experiment with streaming only if it doesn't undercut any of their existing business models, which is why it will fail. You'll have a system stuck with all of the problems of the old system (high cost, limited time rentals, limited selection) AND the problems of the new medium (lower quality, annoying software, doesn't work on your TV).

It's the same story every time. Incumbents have no reason to damage their old business model, and upstarts have no access to the content because it's all locked up by the incumbents. Occasionally you run into success stories, like Netflix, which due to a quirk of the law was able to offer better service and maintain access to all of the content. You can bet that the studio lobbyists are trying their best to make sure that won't happen again. It is no coincidence that every few months you get a big new "content protection" bill going through Congress. Congressmen don't care about this stuff normally, they don't even know about it.

The studios are happy with Video On Demand type services offered by Cable and Satellite companies. They're extremely profitable and give them tremendous control over what content is available. Anything "new" is going to follow the same basic model and price points. Companies like Netflix that want to offer something better are the enemy.

Netflix would do everything you mention if Hollywood would let them, but they won't so they can't.

Not quite. NetFlix is putting the barrel in their own mouths and handing the gun to Hollywood. While Hollywood is hosing them on price that doesn't explain why Starz lets Netflix stream 2,500 of their titles and NetFlix decides to only stream 1000 of those. 1,500 never to be streamed titles while Netflix bumbles around offering nothing new to thier streaming customers and when they do it is 1. old2. bad and cheap.3. Some nobody's documentary of dubious quality.4. Foreign films that no one cares about.

On the rare occasion that NetFlix offers something actually new it is something almost no one wants so it was cheap. Other than that it is just rearranging their "new releases" so that you will hopefully fail to notice that some of them have been streaming on Netflix for more than a year. If NetFlix couldn't keep a new release listed as a new release for more than a month after it started streaming those would be blank or nearly blank categories. They are not getting much of anything worth seeing any more. Their customer service is terrible in that mongoloid kind of way. I suspect being publicly traded will kill them as they try to make money for investors by not providing content to customers (we get X in monthly fees and we spend 0 on new acquisitions, profit for the share holders!!! What do you mean the customers are beginning to drop our service?). Now I'm wondering how Amazon is streaming service wise. They may have sway with Hollywood as they sell a lot of product for Hollywood.

The studios want DVDs to die. The first sale doctrine screws them out of too many "per view" dollars. In the 80's, there were separate "rental" and "private ownership" versions. Movies cost a LOT of money (one reason, was it simply cost a lot more to make VHS; each copy had to be "recorded" and it took far more time).

However, Netflix is killing them - look at the 28-day and now hoped-for 56-day windows. I know I don't buy movies anymore (except Disney, for the kids - then I rip them and re-burn them "movie only" so the kids can abuse, scratch, and I remake "new" copies).

Studios want to stream, but also want to do it THEIR way, with THEIR prices, not profiting any middleman (netflix). As someone earlier posted, they miss their $5-ish VOD / PPV prices (even that split money with cable companies).

No, studios want to farm the content directly to you, and keep as much of your money as they can figure how to separate from your wallet. Even Apple is a 30% "tax" that they'd rather keep.

$2 to stream a movie? If physical media dies, I'm sure they'll try to get back to the $5ish range as quick as they can.

I predict that within a year or 2... we'll see experimenting with a full-scale streaming of new releases (not via a 3rd party) AND a delayed release of all physical discs.

The studios are willing to experiment with streaming only if it doesn't undercut any of their existing business models, which is why it will fail. You'll have a system stuck with all of the problems of the old system (high cost, limited time rentals, limited selection) AND the problems of the new medium (lower quality, annoying software, doesn't work on your TV).

It's the same story every time. Incumbents have no reason to damage their old business model, and upstarts have no access to the content because it's all locked up by the incumbents. Occasionally you run into success stories, like Netflix, which due to a quirk of the law was able to offer better service and maintain access to all of the content. You can bet that the studio lobbyists are trying their best to make sure that won't happen again. It is no coincidence that every few months you get a big new "content protection" bill going through Congress. Congressmen don't care about this stuff normally, they don't even know about it.

The studios are happy with Video On Demand type services offered by Cable and Satellite companies. They're extremely profitable and give them tremendous control over what content is available. Anything "new" is going to follow the same basic model and price points. Companies like Netflix that want to offer something better are the enemy.

Bingo! Verizon/Redbox won't be any better* because the studios won't let them be. Low price and greater availability are the studios' enemy.

Only way this will be worth anything is if they can do better than Netflix and Amazon about licensing (and keeping) content. Alternatively if they have Hulu type Day 1 content and can get some of the stragglers like HBO and Showtime on board. I don't see either happening.